There is an array of provisions utilized by contractors and owners to help reduce the frequency of disputes and conflicts related to scheduling and payments, but what about issues that arise from delays in production? The Delays Provision is designed to give the contractor a reprieve from culpability when things like inclement weather slows the construction project.
At Cotney Construction Law, our Miami construction lawyers can help you incorporate the Delays Provision into your next contract so you (the contractor) aren’t penalized by the owner in the event of unintentional setbacks or damages caused by forces outside of your control. In this two-part series, we will introduce the Delays Provision before explaining the positives and negatives of utilizing this contractual provision in part two.
What is the Delays Provision?
Delayed work often falls outside of the agreed upon timeline. Sometimes, there’s nothing drafted into the contract to protect the contractor when delays throw a project off its schedule. The Delays Provision is intended to foster leniency between the owner and contractor when unintentional delays slow down a project’s progress. This means that the Delays Provision is essentially a form of assurance guaranteeing contractors will be compensated when providing provisions of labor on a delayed project.
The source of a delay is an important consideration of the Delays Provision. Compensable events, sometimes referred to as “force majeure” or “Acts of God” events, include project delays stemming from labor disputes, material shortages, actions taken by the government, inclement weather, and other factors including threats of terror, product recalls, and unexpected changes in insurance policy coverage. As a rule of thumb, if something occurred outside of the contractor’s direct control, they can likely chalk it up to “force majeure.”
The Delays Provision Helps Contractors Avoid Unfair Penalties
The purpose of the Delays Provision is relatively cut and dry. However, there are certain aspects of this provision that may surprise owners and contractors. For instance, this provision not only protects contractor compensation in the event of a delay, it also compensates the contractor for any additional expenses resulting from a delay. For instance, if an owner pays for a new roof that is subsequently destroyed by inclement weather, it’s not the contractor’s responsibility to pay for an additional roof installation. This responsibility would fall on the owner. Some additional costs caused by delays include material price escalations, project acceleration costs, and ancillary overhead costs.
Additionally, this provision often incorporates a “no-damage-for-delay” clause. The purpose of this clause is to protect the owner from having to continually fulfill the contractor’s request for non-compensable events that have caused delays. However, due to conflicts arising from this clause in the past, courts have limited their use in commercial construction contracts.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.